The rise of Decentralized Finance (DeFi) has introduced an unprecedented scope for blockchain implementation. Today, the technology not only augments traditional finance but also overcomes several of its shortcomings and persistent bottlenecks.
In turn, the emerging blockchain-cryptocurrency community has propelled the growth of myriad financial solutions, bringing under their fold many hitherto excluded segments. For example, consider the global unbanked population, wherein DeFi has brought secure trading, lending, as well as identity services, thus enabling their access to financial services.
In this context, credit rating systems and their assigned scores have emerged as a crucial element. Presently, CreditCoin and Hybrid Bank are two of the most promising players in this space, although the two projects have substantial differences. In this article, we discuss some of these differences.
Applicability of the Two Solutions
The following paragraphs are an attempt at distinguishing the applicability of Hybrid Bank and CreditCoin, and in doing so, it shall reveal the specific nuances of credit identity and information system.
Vision & Mission
Hybrid Bank is a leading visionary in building a holistic approach towards creating a crypto credit-based identity system which primarily registers and tracks wallets to monitor the amount of crypto assets held by blockchain companies in real-time. Additionally, the value of cryptocurrency assets issued by blockchain companies, purchase and sale orders (bonds), promotion activities, and community activation indexes will also be anchored in real-time. This will create a highly reliable and transparent corporate crypto credit information system.
CreditCoin defines themselves as a single-purpose blockchain meant for recording credit records objectively. With the 1.7 billion globally unbanked population that use shoddy and unsecured access to loans, traditional banks are unable to use these transactions to accumulate credit as they are unrecorded. CreditCoin aims to bring these transactions to the blockchain ecosystem and record them.
Credit History and Credit Score
With the holistic approach undertaken by Hybrid Bank, it is automatically empowered to fulfil numerous secondary financial tasks. Because they are primarily a lending platform, along with monitoring the value of crypto assets listed on exchanges, they also connect with wallets of individual users in real-time. This allows them to build a credit information system that takes into account both quantitative (real-time data from wallets and valuation of assets) and qualitative assessment (management, evaluation, and insights into models/roadmaps for generating revenue) indexes. Both these aspects put together, creates an incentive to generate a first-of-its-kind, cryptocurrency-based credit reports for individuals and companies. This serves as the first extensive step for lenders to avoid bad-debts based on personal identity, credit history, capacity, and collaterals.
CreditCoin on the other hand is intensively focused on registering credit histories and with that, creating an opportunity for better investment. It allows decentralized credit history on their blockchain, and enables blockchain-based lending. On their whitepaper, CreditCoin honestly evaluates the limitations of their scope and says, “Since we know that blockchain technology is not a silver bullet, we leave related services, such as identification and credit scoring, to others.”
CreditCoin only records the credit history of its token holders, and currently, these users can only make Bitcoin and Ethereum transactions through specific add-ons. Until and unless they come up with extensive add-ons or gateways, their services won’t be available to users of other cryptocurrencies.
In this respect, Hybrid Bank’s services extend to the 300+ exchanges and 25 million+ cryptocurrency users through their API technology. Hybrid Bank is currently partnered with BitForex and their application already has access to the 4 million+ core crypto users registered on BitForex’s network.
Lastly, while CreditCoin records users’ credit history permanently on their blockchain and makes them available publicly and for free, Hybrid Bank guarantees control, autonomy and security to the users. Hybrid Bank’s users have the choice of sharing their personal and credit information according to their will thereby allowing ownership of information to users.